Transportation Industry News Prepared by: CPA International, Inc. April 2010 Hapag-Lloyd Hikes India RatesHapag-Lloyd Hikes India Rates Hapag-Lloyd will seek a general rate increase on all cargo moving from India to the U.S. East and West Coasts, effective May 1. The planned increase will be $600 per 20-foot container, $750 per 40-foot container and $845 per 40-foot high cube container. The move follows a similar GRI announcement by Dubai- based United Arab Shipping Company covering the same trade lane. Effective May 1, the UASC increase will be $500 per TEU. The Middle East carrier will also increase rates on the eastbound trades from North Europe to the Indian Subcontinent and the Middle East. Effective April 1, the increases are: $100 per TEU and $200 per FEU for shipments to the Indian Subcontinent, the Arabian Gulf and the Red Sea region; and $150 per TEU and $250 per FEU for shipments to Asia. FedEx Launches Automated International Document System FedEx Corp. said it has launched a system that allows shippers to electronically upload and manage international shipping documents. The FedEx Electronic Trade Documents system allows customers to migrate to a fully automated system for international shipping, the carrier said. Benefits of the system include the speed of electronic transmission, elimination of paperwork and streamlining of the customs process, FedEx said. FedEx Corp. is ranked No. 2 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers. A National Intermodal Shift The Obama administration is forming a national freight transportation policy that can be boiled down to one concept: Get more trucks off the roads. “We want to keep goods movement on water as long as possible, and then on rail as long as possible and truck it for the last miles,” Deputy Transportation Secretary John Porcari said at a March 24 Senate Environment and Public Works Committee hearing. In a single sentence, Porcari described what appears to be the most sweeping change in a generation in the federal government’s approach to shipping and transportation, promising an ambitious and concerted effort to redirect the way freight flows through the country’s long-standing supply networks. The DOT’s intermodal strategy is upending a long-standing if sometimes uneasy balance between transportation interests in Washington and transforming debate over federal transportation dollars. It comes as Congress and the White House grapple with spending priorities and even a schedule for turning a proposed $500 billion surface transportation bill into law. A National Intermodal Shift But the Obama administration is looking beyond the traditional multiyear highway bill for other ways to fund infrastructure projects, whether an infrastructure bank or new rounds of discretionary grants aimed primarily at intermodal freight. With the number of non-freight and non-highway groups seeking a share of federal transportation dollars growing, trucking interests are calling for stronger safeguards against any diversion of money from the fuel tax-fed Highway Trust Fund. Porcari’s comments echo remarks Transportation Secretary Ray LaHood made in an interview last month with The Journal of Commerce, when he said six times that “getting more trucks off the road” is a prime objective of the DOT’s freight transportation policy. YRC Worldwide Shipments Rose in March Trucking giant YRC Worldwide says its daily shipment volume improved month-to-month in the first quarter, but business levels remained depressed from a year ago. The preliminary first quarter shipment statistics indicate the company’s bounce back from the recession and its close brush with bankruptcy is proceeding slowly. The $5.3 billion company’s nationwide less-than-truckload carrier YRC handled approximately 42,700 shipments per day in the first quarter, the carrier reported. Customer fears raised by YRC’s battle to stave off bankruptcy late last year and brutal winter storms in February drove down shipments in early 2010, the company said. But shipments are blooming this spring. The average number of shipments handled rose each month from 41,100 per day in January to 44,900 per day in March. CSX’s First-Quarter Income Rises 22% Eastern freight railroad CSX Corp. said its first-quarter net income earnings-per-share jumped 22% from a year ago. Net income rose to $306 million, or 78 cents a share, from $246 million, or 62 cents, a year ago, CSX said late revenue rose 11% to $2.49 billion. Freight carloads rose 5%, led by a 64% jump in automotive shipments, the Associated Press reported. Commodity shipments such as chemicals and metals also improved. Intermodal revenue rose to $323 million, from $270 million a year ago, while intermodal operating income increased to $39 million, from $24 million. CSX operates in the eastern United States and parts of Canada. CSX Rates to Rise 4 to 5 Percent in 2010 CSX Transportation is sticking with its earlier guidance to see core pricing gains of 4 to 5 percent during 2010 although its first-quarter price gains were at the top of that range. CSX reported price gains of 5 percent in the quarter ending March 26 on what it calls “same-store” business, which is the company’s way of comparing freight activity on same lanes for the same commodities. The rail firm has 85 percent of our contractual business already signed and in place or this year, and good visibility into how the remaining 15 percent may unfold. So they will stick for now with the company’s previous full-year rate increase guidance for overall business Truckload Spot Shipments Rocket in March Truckload spot market freight volume reached pre-recession levels in March, climbing 259 percent from a year ago and 14 percent from March 2008, according to TransCore’s North American Freight Index. The index broke 1,000 for the first time since June 2008. It was the sixth straight month of positive year-over-year comparisons in the index, which is based on millions of spot truckloads and available trucks fed into TransCore’s DAT Network -- a load board for shippers and carriers in the United States and Canada. The spot market index supports truckload carrier claims of higher volumes in recent weeks and months. “We exceeded our goals for the first time in 18 months in March,” Pat Quinn, co-chairman of U.S. Xpress Enterprises, told The Journal of Commerce. “We’re definitely seeing a pickup in demand, though I’m not sure if it’s the economy picking up or the result of 15 percent of the available trucks being taken out of service,” said Quinn, whose company operates about 6,000 tractor-trailers nationwide. Truckload Spot Shipments Rocket in March The strength of the spot market measured by TransCore’s index is underscored by quarterly results, as well. Total spot freight volume more than tripled in the first quarter of 2010 over the same period in 2009 and was 11 percent higher than in 2008. The spot market results for the 2010 quarter exceeded first quarter results for every year since 2004, when volume was 4.5 percent higher. UPS Sees Higher First-Quarter Results UPS Inc. said its first-quarter earnings per share will increase to 53 cents, from 40 cents a year ago, while adjusted earnings will be 71 cents, up from 52 cents last year. As a result of the strong earnings and an improved outlook for the remainder of the year, full-year adjusted earnings will be $3.05 to $3.30 per share, “a significant increase over the $2.70 to $3.05” guidance provided in February, UPS said . First-quarter revenue rose 7%, led by increases of 18% in the international package unit and 14% in the supply chain and freight segment. International daily volumes grew significantly with exports up more than 9%, while U.S. domestic daily volume rose less than 1%, the first year-over-year growth in more than two years. ABF, Teamsters Reach Tentative Agreement ABF Freight System and the Teamsters union said they have reached a tentative agreement to modify the labor agreement for the company’s employees covered under the National Master Freight Agreement. No details were released by either side, but an ABF official said the less-than-truckload carrier could release elements of the plan as early as the beginning of the month. The Teamsters said in a posting on its Web site the plan will be presented to leaders of local unions representing ABF members. “The leaders will be asked to endorse the plan at the meeting in Chicago [and] if leaders endorse the plan, members will then have the opportunity to vote on whether to approve the plan,” the union said. ABF began talking with the Teamsters about cost reductions last year as its losses mounted. Excluding one-time costs, parent company Arkansas Best Corp. lost $99.9 million in 2009 after posting a profit of $49.1 million the year before. Arkansas Best Corp. is ranked No. 18 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers. Truck Rates Primed to Rise Trucking rates have nowhere to go but up, and they’re ready now, several speakers told freight shippers at NASSTRAC's annual conference. "Price increases will be coming, and they may be coming sooner rather than later," said Chad Thomas, director of intermodal at J.B. Hunt Transport Services. He was talking about truckload rates, but other speakers at the conference in Orlando, Fla., said the same holds true for less-than-truckload pricing. "From a shipper's perspective, rates are going to go up," said Jon A. Langenfeld, transportation analyst and associate director of research at R.W. Baird & Co. In truckload, "Rates are going to move higher if for no other reason than the age of the capacity base out there," he said, noting that many older trucks are being retired. "The age of the fleet today is as low as it's been in a generation, and that means there's not a lot of capacity out there for when demand increases.“ Truck Rates Primed to Rise "In truckload pricing, the pendulum has swung, and if you haven't talked to your carriers yet, get out there and do it before they come to you," Langenfeld said. On the LTL side, "it's going to take longer, but the trend is definitely up." Shippers are bracing for rate hikes while looking for ways to lower costs. "I see a lot of trouble explaining to our management why we need all these rate increases," said Candace Holowicki, manager of logistics at Masco Corp. FedEx Freight May Put Shipments on Rail in Future Trucking company FedEx Freight, which has pointedly rejected rail transport in the past, could switch and turn to intermodal in coming years if the price is right and customers want the option. The transportation industry is changing rapidly, and carriers must also be ready to change, Bill Logue, president of FedEx Freight, told shippers at the NASSTRAC annual meeting "Customers want options," said Logue, president of FedEx Freight. Logue says he isn't ready to drive freight toward intermodal yards. "We find in most cases the railroads still have a transit time issue," he said. "But five years down the road, intermodal may be much more significant. As international globalization continues, the dynamics will change, and there will be an opportunity for more rail," Logue said. Diesel Edges Up for Fourth Week Average price increases four-tenths of a cent to $3.078 per gallon The average price of diesel edged up four-tenths of a cent to $3.078 per gallon last week, according to the U.S. Energy Information Administration. In increments of less than a penny, the price of diesel barely increased over the last two weeks of April to stretch a four-week run of rising prices. The slow pace of increases extends an upward trend since prices hit their most recent bottom just over a year ago at $2.09 per gallon on March 23, 2009. The last time diesel was over $3 per gallon, it had fallen for four months from its historic peak of $4.764 per gallon on July 14, 2008 to $3.088 per gallon on Nov. 3, 2008. Prices were in the midst of a steep correction that brought them as low as $2.09 per gallon by March 23, 2009. Since then, a slower and less steady pace has brought the price up again. Transportation Industry News For specific questions regarding these topics, please contact CPA International toll free at 888-684-4288 or via Email email@example.com for details.
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